The company has a long history of operation and is a leading tin-indium double enterprise. The company's predecessor was founded by the Imperial Court in the 9th year of Qing Guangxu (1883). After 141 years of accumulation and development, the company currently has an industrial pattern integrating the entire supply chain of exploration, metallurgy, deep processing, new material development, and trade of non-ferrous metal resources such as tin, indium, zinc, copper, etc., and ranks first in the world in terms of tin and indium resource reserves. It has the longest and most complete tin industry chain in the world. By the end of '23, the company had 0.6464 million metal tons of tin, 1.1672 million tons of copper, 3.7628 million tons of zinc, 4945 tons of indium, 0.0775 million tons of tungsten trioxide, 0.0954 million tons of lead, and 2,491 tons of silver.

Relying on resource advantages, it has built a complete tin industry chain layout, and has become the world's largest tin producer. 1) On the mining side, the company's mining resources are mainly distributed in Datun Tin Mine, Laochang Branch, Kafang Branch, and Hualian Zinc Indium. The total amount of tin resources is 0.6464 million metal tons, and the raw material self-sufficiency rate is about 31%. 2) On the smelting side, the company has a tin smelting production capacity of 0.08 million tons/year. It is the world's largest producer, with a domestic tin market share of 47.92% and a global tin market share of 22.92%.

It has the highest indium reserves in the world. The company has 4,945 tons of indium resources. Among them, the Dulong mining area has rich reserves of indium resources. It has the highest indium resource reserves in the world, and is the largest native indium production base in the country. In 2023, the company produced 102 tons of indium. The global market share of refined indium production reached 4.38%, and the domestic market share reached 6.92%, of which the domestic market share of native indium was about 15.83% and the global market share was about 9.63%.

Tin: The trend is gradual, and tin bulls can be expected. The strong rise in tin prices since 2024 is mainly affected by several factors:

1) On the demand side, macro expectations are improving, global manufacturing PMI has improved marginally, the inventory cycle has entered the inventory replenishment stage, the consumer electronics growth rate has been positive year on year for two consecutive quarters, and recovery expectations are strong;

2) Supply side: Myanmar's Wa state began to stop mining in August 23, but the amount of tin ore imported by China from Myanmar did not decline significantly, mainly due to digestion of Wa stocks. As Wa stocks fell to a low level, imports had dropped sharply since April; in the first quarter of '24, due to the Indonesian election, local RKAB approval was slow, and Indonesia's tin ingot exports were significantly lower than the same period last year, and LME stocks continued to degrade to a historic low level.

In the medium to long term, tin resources are scarce, static storage is relatively low, and most of the new projects are put into operation after 25 years. There is a lack of capital expenditure, demand-side semiconductors are gradually recovering, AIPC, etc. are starting a new boom cycle, while demand in the photovoltaic sector remains high. Simply put, under the “rigidity of supply+upward margin of demand” supply and demand pattern, tin prices rise and fall easily. Upward elasticity can be expected, and the center may gradually move upward.

Profit forecast and investment suggestions: Assuming that the average tin price in 2024-2026 is 0.25, 0.26, and 0.27 million yuan/ton, respectively, and tin production remains 0.08 million tons, and the self-produced mine is 0.024, 0.0245, and 0.025 million tons respectively. The company's net profit to mother for 2024-2026 is 2.165, 2.317, and 2.413 billion yuan respectively, up 54%/7%/4% year on year, as per the closing of 22.8 on August 12 Based on the billion market value calculation, the corresponding PE for 24-26 is 10.5, 9.9, and 9.5X, respectively. It fully benefits from the upward cycle of tin prices, is highly flexible in performance, and maintains the company's “buy” rating.

Risk warning: Risk of price fluctuations of main products, risk of downstream demand falling short of expectations, bias in demand estimation, risk that public information used in research reports is not updated in a timely manner, etc.